Former New York State Pension Director Allegedly Hid Pay-to-Play Scheme

An investigation by the New York State Comptrollers
office has shed more light on Navnoor Kang, the former head of
portfolio strategy at the New York State Common Retirement Fund
who allegedly manipulated internal processes to conceal a
pay-to-play scheme.

Kang, who in December was
indicted for accepting bribes in exchange for the pension
plans fixed-income trading business, allegedly deleted
records documenting the identity of the brokers used in
transactions he oversaw, to hide any wrongdoing, according to a
review
released Wednesday by the comptrollers office. In
January, Kang, the pension funds former director of fixed
income,
reportedly denied in federal court that he accepted any
bribes.

Unlike his predecessor, Kang personally made trades without
anyones approval, according to the review. The
investigation also found that Kang would tell brokers involved
in his scheme to send trade confirmations to a subordinate
investment officer, who hed then instruct to approve the
trades.

Comptroller Thomas DiNapoli wrote in the review that Kang
used the trading process not only to steer business to
his accomplices, but also to create the false impression that
most of these transactions were conducted by investment staff
and then approved by him.

The review also described several issues during Kangs
tenure at the pension fund, including a ski trip he had taken
on the dime of a broker, and problems with his management,
including a lack of communication, that led to his firing in
February 2016.

DiNapoli outlined several actions that the pension plan will
take in response to Kangs manipulation of internal
controls. The New York State Common Retirement Fund will
reinstitute weekly and monthly trade reports that include
broker names reviewed by the funds CIO or deputy CIO. The
deputy CIO and director of compliance will also regularly
review trading reports for spikes or anomalies in
trade volume.

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